MUMBAI (Commodity Online): The Government of India has raised iron ore export duty from 20% to 30%, thus making 2012 a tough road ahead for the Indian iron ore industry. The new rates will apply to both fines and lumps and is effective from Dec 30, 2011. India is the third largest exporter of iron ore in the world.
The hike means that exports will now cost an additional Rs 265/tonne to Rs 690/tonne, depending on the grade of iron-ore. Under the present economic situation, when demand for base metals are seen waning, the rate hike will make Indian iron-ore more expensive in international market.
An already high duty had dampened exports for most of 2011 and with the new increase, the future does not look appealing. “It will be the end of exports of iron ore fines from India. With an already high 20% duty, export had declined 28% in the first eight months of the current financial year”, Steel Guru quotes Mr RK Sharma, Secretary General of Federation of Indian Mineral Industries (FIMI)
The Indian iron-ore industry has had a terrible 2011, with the mining scam in Karnataka stalling production from the area, exports falling due to high duties and domestic consumption declining due to economic contraction.
Going into 2012, exports are expected to fall much further especially with demand from China estimated to weaken on the back of its growth slowdown. China is the largest export market for Indian iron ore.
